LONDON MARKET OPEN: Pound Holds Firm Against Rising Dollar; Beazley Up

(Alliance News) - Stock prices in London opened slightly higher on Friday, with the FTSE 100's gains hindered by strength in the pound, while FTSE 250-listed insurer Beazley's annual results were well-received by investors despite swinging to a loss.

Positivity in equity markets has been supported by the UK's swift mass vaccination programme. Meanwhile a nationwide drop in Covid-19 cases in the US and improvements in economic indicators have raised hopes that the US labour market is on the upswing.

President Joe Biden has pressed for USD1.9 trillion in stimulus spending to support the economic recovery and the White House has said a one-month jobs gain will not alter the need for the aid. The US jobs report for January is due at 1330 GMT.

The internationally exposed FTSE 100 index was up 4.49 points, or 0.1%, at 6,508.21. The mid-cap FTSE 250 index was up 54.89 points, or 0.3%, at 20,864.17. The AIM All-Share index was up 0.3% at 1,207.13.

The pound was quoted at USD1.3704 Friday morning, up sharply from USD1.3659 at the London equities close Thursday.

"The only notable currency not to submit to dollar strength was sterling, which remained underpinned by the strong gains that followed the BoE's optimistic commentary about the UK economic outlook," said analysts at Daiwa Capital Markets.

The Cboe UK 100 index was flat at 646.35 points. The Cboe 250 was up 0.2% at 18,344.31, and the Cboe Small Companies was up 0.1% at 12,371.54.

In mainland Europe, the CAC 40 in Paris was up 0.7% while the DAX 30 in Frankfurt was 0.1% lower.

"With investors looking through the vaccination rollout programmes to the economic recoveries which should ensue, the first week of the month's trading has been generally positive," said Richard Hunter, head of Markets at interactive investor.

"Meanwhile, there have been some encouraging developments on the progress of President Biden's USD1.9 trillion relief plan which has prompted further optimism. With the Fed in reserve to provide monetary support if required, and with a generally positive earning season so far, there are an increasing number of factors lending support."

On the London Stock Exchange, Burberry Group was the best blue-chip performer, up 2.7%, after Goldman Sachs upgraded the fashion house to Neutral from Sell.

Barratt Developments was up 2.0% after Liberum raised the housebuilder to Buy from Hold.

At the other end of the large caps, Johnson Matthey was the worst performer, down 3.2%, after Barclays downgraded the speciality chemicals company to Underweight from Equal Weight.

In the FTSE 250, Beazley was the standout performer, up 11%, despite the insurer swinging to an annual loss and skipped paying any dividend for 2020.

Beazley posted a pretax loss of USD50.4 million for the year ended December 31, swinging from a USD267.7 million profit in 2019 on revenue of USD2.91 billion, up 10% from USD2.34 billion. However, the loss was just half of market forecasts for a USD106.4 million loss.

"Given the underperformance of the shares year-to-date, we expect that the surplus capital ratio of 23% will be in focus," analysts at Jefferies said.

At the other end of the mid-caps, Signature Aviation was the worst performer, off 2.9% at 413.10 pence, as the aviation services provider moved a step closer to private ownership. The stock is up 68% since bid interest first emerged in December, however.

Signature said it has recommended an offer by newly formed acquisition vehicle Brown Bidco, which consists of US-based private equity firm Blackstone and former suitor Global Infrastructure Partners. The consortium also includes Cascade Investment, a fund which manages Bill Gates's investments.

The new deal announced on Friday will see Brown Bidco offer USD5.62 per Signature share, or 411 pence, in cash, valuing the company at USD4.73 billion, about GBP3.46 billion.

The Japanese Nikkei 225 index closed up 1.5%. In China, the Shanghai Composite ended down 0.2%, while the Hang Seng index in Hong Kong finished up 0.6%. The S&P/ASX 200 in Sydney closed up 1.1%.

The euro was priced at USD1.1965, lower from USD1.1976. Against the yen, the dollar was trading at JPY105.52, higher versus JPY105.44.

Brent oil was quoted at USD59.11 a barrel Friday morning, sharply higher from USD58.55 at the London close Thursday. Gold was quoted at USD1,799.10 an ounce, up from USD1,788.70.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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